Moab Regional Hospital has received a bit of a reprieve from its financial woes after the Grand County Council and Moab City Council both voted to provide money to the Canyonlands Health Care Special Service District.

The biggest contribution came Wednesday, Nov. 7, when county council members unanimously authorized $195,000 from the county’s general fund. The city council approved a one-time payment of $82,000 during a special meeting Nov. 15.

With that seed money, the hospital stands to receive at least $840,000 from Utah’s Medicaid Disproportionate Share (DSH) payment program. Roy Barraclough, chief executive officer for MRH, said that without the money the hospital would see an increase in its bad debt.

DSH payments are money from the federal government paid to hospitals that serve a disproportionate number of patients who are on Medicaid, indigent or uninsured, according to Barraclough. However, the hospital is required to provide seed money in order to receive those payments, and that money has to come from a government entity.

Of the city’s allocation, $75,000 had originally been intended to go into the city’s Utah State University Set Aside Fund. The remaining $7,000 would have gone toward the city’s fund balances.

According to Barraclough, the hospital’s financial difficulties started with the move to the new facilities on Williams Way in February 2012.

“We knew going in... that when you change physical plants... there are going to be changes necessary to your procedures,” Barraclough said.

He explained that the hospital saw faster than anticipated increases in volume during the first several months of operation, which left the facility unable to keep up.

“It all came together in what you might call a perfect storm that put a great deal of pressure on the available resources that we had,” Barraclough said.

Those difficulties became more apparent in May when the hospital discovered that it did not have enough money to cover all of its payroll costs and the mortgage payment.

Barraclough said the hospital chose to make payroll. The late payment on the mortgage caused the U.S. Department of Housing and Urban Development (HUD) to get involved. HUD serves as the guarantor for the hospital’s loans. As a result, the hospital hired a consulting firm to help Moab Regional work through the issues.

“One of the critical things that’s available to us is almost a four-to-one return on DSH payments from the federal government for a disproportionate share hospital,” hospital board chairman Mike Bynum told the Moab City Council in September.

In September, Barraclough and Bynum approached both the Grand County Council and the Moab City Council to ask for funds toward the DSH seed money. The hospital asked for a total of $277,000.

The city established the USU Set Aside Fund in July 2011 as a long-term savings account to help provide funding toward the development of a new USU campus in Moab. The city set the fund up with the intention of adding money every year, but with the caveat that if the council decided the money was needed elsewhere, they had the discretion to spend it.

Moab City Council member Kirstin Peterson expressed concerns about how the hospital got into the difficult financial position to begin with.

“It appears that there maybe wasn’t enough oversight or communication as to what the financial situation was[when the previous CFO left],” Peterson said.

Barraclough said he believes there could have been more oversight, both by the hospital board and the administration.

The hospital also had to come up with approximately $26,000 in additional funds to reimburse the state for a previous payment the hospital failed to make. That money was part of another program that concentrated on outpatient Medicaid.

Barraclough explained that the program was a self-seeding program, meaning that the state provides a payment to the hospital with the expectation that a portion of the money will be repaid to the state. In this case, the state provided $84,000 in 2010.

Of that money, $26,000 should have been paid back, he said. Just like the DSH payments, the money had to be funneled through a government agency. Barraclough said a private donation was made to the Canyonlands Health Care Special Service District, enabling the hospital to make arrangements for that payment.

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